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As the skies get clearer and the weather gets warmer, the last few weeks of spring surely inspire a lot of mush. Besides, research says that being in love is good for your health. Yes, being in love is known to reduce stress, lower the blood pressure and maintain a healthy heart. A quick Google search would throw up hundreds of benefits of coupling up. But, what if we told you that being in love could be good for your wallet as well?

There is no denying that the rising property prices have made it well-nigh impossible for most to conjure up a decent amount of deposit for their home. However, coupled with your partner’s savings, it is possible to expedite your journey to property ownership.
 

 
Yes, co-ownership is the answer many Australians have found to the growing issue of housing affordability.
Since two is always better than one, keeping love aside, co-purchasing a property improves your buying capacity and reduces your debt. Moreover, you can split other costs such as utility bills, water and maintenance charges as well.

Indeed, combining your borrowing power could have significant advantages:

  • You can save for a deposit faster, which means you could buy your dream home sooner
  • A larger deposit means you no longer have to pay LMI, which could save you thousands of dollars
  • Increased borrowing capacity, which means more choice concerning location and size of the property
  • Shared expenditure such as legal fees, cost of setting up the loan and stamp duty
  • Reduced cost of ownership as expenses are shared

However, it is also true that people fall out, and sometimes, despite best intentions, relationships do not work out.

So, before you take the plunge into owning property together, we suggest that you proceed with caution, practically assessing your options – because you don’t want to lose honey as well as money – in case things go awry in the future.

Talk it out – Frank and honest communication is the bedrock of a successful relationship. Similarly, successful property transactions are also based on honesty and communication as well. Before you co-purchase a property – you need to engage in more than just the regular pillow talk. Discuss your budget, plans, fears and aspirations before taking any decision.

Choose the right structure for your joint property – If you are not married to each other, there are two main ownership structures to choose from – ‘Tenants in Common’ and ‘Joint Tenants’.

As ‘Tenants in Common’, each party has a distinct share in the property. If any of the owners dies, her share is passed on to her beneficiary and not the other owner. Besides, each party can sell or give away her interest in the property. In contrast, ‘Joint Tenants’ hold the property equally and if one of the owners dies, her interest passes on to the surviving owner (s) automatically. It is recommended to seek independent legal advice before choosing your mode of ownership.

Get into legal documentation – It might sound harsh now, but sometimes, situations change and relationships suffer, leading to disputes and heartbreak. Thus, it is best to enter into a formal co-ownership agreement at the outset, to avoid any hassles in the future. It is essential to draw up correct legal documentation, including a co-ownership agreement, recording each party’s rights and obligations as well as an exit plan if either or both of the parties want to sell the property.

Take informed decisions – While co-purchasing a property could help you climb the property ladder faster, it is also important to understand the impact of co-ownership on any loans you wish to secure in the future. For example, if Lily and Tim borrow $500,000 to purchase a property jointly, in their opinion, each one of them has a loan of $250,000 on their books. However, lenders perceive this situation differently. If either Tim or Lily applies for a loan in the future, banks will record their liability as $500,000 each. This is because each borrower is jointly and severally liable to pay the mortgage.

Thus, it is essential to contact an expert before you decide to buy a property jointly. Apart from your legal and financial advisors, speaking to a mortgage broker could help you understand your options better.


HashChing is an online mortgage marketplace that brings you broker pre-negotiated home loan deals from over 60 lenders across Australia, updated every week. Compare home loans online to get the most competitive rates in the market.

 

By Vidhu Bajaj,
HashChing Content Writer

 

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